Which of the Following Will Most Likely Occur During the Expansionary

question 102

Multiple Choice

Which of the following will most likely occur during the expansionary phase of a business cycle?

• A) Real GDP rises, and unemployment falls.
• B) Real GDP declines, and inflation rises.
• C) Interest rates rise, and the number of business failures rise.
• D) Inflation rises, and employment falls.

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Definitions:

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Withholdings

The portion of an employee's earnings that is deducted and sent directly to the government by the employer for tax purposes.

Salaries Expense

The total amount paid to employees in salary form over a specified accounting period, considered an operating expense.

Notes Payable

Short-term or long-term liabilities representing amounts owed for borrowed funds, documented by a promissory note.